No. of Recommendations: 7
I'm curious, if you were short brk, are you saying you sold more calls than you had shares to back? Or were the calls sold against long dated calls you are holding that may require a broker to view it differently due to the mismatch of expiration timing? Or is it something completely different I'm not even considering?
No, I didn't sell more calls than I have BRK positions...that would leave me net short. That would be a pretty risky proposition for such a fine firm, though I might consider it at over 2x book : )
The call position isn't really specifically tied to any long position in any firm sense.
But, I have calls and stock and cash. Since I'm long one way or another more than the calls I wrote, it's in effect a covered call.
What I meant about interest was this:
The call raised cash, which is sitting in my account and shows up as part of the balance.
But I don't believe the cash raised by selling that call counts towards the fraction of my cash pile that is earning interest.
And (I'm embarrassed to admit I don't really know), I think a bit MORE of my cash also does not earn interest while I'm short the call, being a portion that is working as margin security for the potential increase in the liability created by the short position.
Jim
